The U.S. House Financial Services and Senate Banking committees said yesterday they will hold hearings on the stock market after users of investment apps faced trading limits following the “Reddit rally” that put a charge into GameStop and other volatile stocks that were touted in online forums, Reuters reported. “We must deal with the hedge funds whose unethical conduct directly led to the recent market volatility and we must examine the market in general and how it has been manipulated by hedge funds and their financial partners to benefit themselves while others pay the price,” said Representative Maxine Waters, a Democrat who heads the House panel. Waters added the hearing will focus on “short selling, online trading platforms, gamification and their systemic impact on our capital markets and retail investors.” An army of retail investors routed Wall Street professionals this week, placing hedge funds in a costly “short squeeze” after the funds had bet on future declines in GameStop and other out-of-favor stocks. But on Thursday, brokerages Robinhood Markets Inc. and Interactive Brokers restricted buying shares in red-hot GameStop and several other stocks that soared after being shorted by professionals. Late Thursday, Robinhood said it will allow limited buying on Friday.
